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The name Islamorada, pronounced (Is-La-Moh-RA-Da) (Original meaning: "Island Home" after the Pinder family schooner of that name), newly nicknamed, "The Purple Isle," came from early Spanishexplorers in the area. Its pronunciation has been anglicized to "eye-lah-moh-RA-da."

Islamorada was hit almost directly by the Labor Day Hurricane of 1935, causing 423 deaths.[2] A memorial, including the ashes of over 300 victims, exists today at Overseas Highway mile marker 82.

Hall of Fame baseball player Ted Williams began visiting Islamorada in 1943 and for the next 45 years was the island's most well-known resident.[3] After his retirement from baseball he became the national spokesman for Sears sporting goods and became renowned for his abilities as a fisherman. Over the decades, he hosted numerous celebrities at his Islamorada house and took them on local fishing trips. Williams’ residency in Islamorada ended in 1988 when he moved to Hernando, Florida. Williams cited the island’s increased development as his reason for leaving. He reportedly said that he knew it was time to leave when he could no longer make a left turn on to U.S. Route 1 because of the traffic.[4]

The village was incorporated on November 4, 1997. Prior to this date, Islamorada was only considered to be on the island of Upper Matecumbe Key.

As of the census of 2010, there were 6,119 people, 2,882 households, and 1,673 families residing in the village. The population density was 838.2 inhabitants per square mile (325.4/km²). There were 5,692 housing units at an average density of 767.7 per square mile (296.6/km²). The racial makeup of the village was 96.54% White, 0.72% African American, 0.38% Native American, 0.59% Asian, 0.13% Pacific Islander, 0.69% from other races, and 0.96% from two or more races. Hispanic or Latino of any race were 9.63% of the population.

There were 2,882 households out of which 17.04% had children under the age of 18 living with them, 48.13% were married couples living together, 5.76% had a female householder with no husband present, and 41.95% were non-families. 31.78% of all households were made up of individuals and 33.24% had someone living alone who was 65 years of age or older. The average household size was 2.07 and the average family size was 2.57.

In the village the population was spread out with 13.86% under the age of 18, 4.5% from 18 to 24, 27.5% from 25 to 44, 35.6% from 45 to 64, and 16.9% who were 65 years of age or older. The median age was 46 years. For every 100 females there were 112.6 males. For every 100 females age 18 and over, there were 112.2 males.

The median income for a household in the village was $41,522, and the median income for a family was $56,118. Males had a median income of $31,339 versus $25,670 for females. The per capita income for the village was $29,519. 6.9% of the population and 3.5% of families were below the poverty line. Out of the total people living in poverty, 7.0% are under the age of 18 and 4.5% are 65 or older.

Much of the action in the Netflix series Bloodline takes place in and around Islamorada:

In the season 1 premiere episode, Islamorada is the Academy Bus stop where John Rayburn is scheduled to pick up his brother Danny, and the station where John drops Danny off soon afterward. In both cases, the bus is a shiny-clean Academy Bus.[12] In episode 11, John drives Danny to the bus stop in Islamorada again, and Danny finally boards a Miami-bound, dirt-encrusted Sunnyside Coaches bus.[13]

John and his sister's boyfriend Marco Diaz are both detectives in the Monroe County Sheriff's Department; "Islamorada District" can be seen labeling their police boat.[12][13]

In season 2, episode 6 (Park 19), Diana is running in Islamorada's Founders Park[14][15] when she discovers her tire is flat; Danny's associate Ozzie Delveccio just happens to be nearby and changes her tire, leaving his prints on her tire iron. John notes the tire's been neatly cut, runs the prints, and confirms a connection between Ozzie and Danny.